Michigan Motor Vehicle Sales Finance Act: Detailed Analysis
Last Reviewed April, 2018
The Motor Vehicle Sales Finance Act (MVSFA or the Act) requires “sales financing companies” to apply for a license when engaged as a principal, agent or broker in the business of financing or soliciting the financing of “motor vehicle” installment sales contracts.
The term “sales finance company” includes a state- or federally-chartered credit union that elects to come under the provisions of the Act.
The term “holder” means a person, including a seller, who is currently entitled to the rights of a seller under an installment sale contract.
The term “motor vehicle” is defined under the Act as “a self-propelled device by which a person or property may be transported upon a public highway.” It does not include tractors, motorcycles, trailers, semitrailers, power shovels, road machinery, agricultural machinery, and other machinery not designed primarily for highway transportation but which incidentally transports persons or property on a public highway. The term also does not include devices that move upon or are guided by a track or travel through the air.
A new or renewal license applicant must submit a separate application, on the prescribed form, for each place of business conducted by or to be established by the credit union within this state. The application for a renewal must be submitted annually on or before the June 16 preceding the renewal period.
A $20,000.00 bond must accompany the first application by a person for license as a sales finance company and applies only to the credit union’s principal place of business. A $10,000.00 bond must accompany each application for an additional location to transact business as a sales finance company.
The bond must be executed by a surety company authorized by the laws of this state to transact business within this state. However, a bond accompanying an application filed by a credit union located within this state may be executed by the credit union on its own behalf instead.
The bond must be executed to the State of Michigan. The condition of the bond states that the credit union will comply with and abide by all the provisions of the MVSFA, and all the rules and regulations of the administrator lawfully issued, and that the credit union will pay to the state, to the administrator or to any person or persons, any and all money that may become due to the state, under the provisions of the MVSFA. A person who is aggrieved by the misconduct of a credit union licensee and who has recovered a judgment against the credit union that has not been satisfied within 30 days after it becomes final, may maintain an action upon the bond in any court having jurisdiction of the amount claimed. Service of process for such an action may be served anywhere within this state.
A new bond or renewal certificate must accompany every application for renewal license, and must be filed annually at least 15 days before July 1.
Receipt of Completed Application for New or Renewal License
DIFS must approve or reject a new or renewal license application within 90 days after the date a complete application is received, or the date it is received by another agency or department of state government on behalf of DIFS, whichever is earlier.
If an application is considered incomplete, DIFS will notify the credit union applicant in writing or electronically within 30 days after receipt of the incomplete application, describing the deficiency and requesting the additional information, the unpaid fee, or the bond. The 90-day time period is tolled upon notification by DIFS of a deficiency until the date the requested information is received by the administrator. The determination of the completeness of an application does not operate as an approval of the application for the license and does not confer eligibility of an applicant determined otherwise ineligible for issuance of a license. The tolling of the 90-day time period does not allow DIFS to otherwise delay the processing of the application, and that application, upon completion, must be placed in sequence with other complete applications received at that same time.
If DIFS fails to issue or deny a license within the time required, DIFS must return the license fee and reduce the license fee for the applicant's next renewal application, if any, by 15%.
Upon issuance of a licensee, the license certificate must be posted in a conspicuous place in the credit union’s place of business in full view of the public at all times.
A license may not be transferred or assigned.
A credit union licensee may change its place of business to another location within the same municipality for which the license certificate was issued. A credit union desiring to change the address of its business must give prior written notice to the DIFS commissioner and must return the license certificate to DIFS for amendment. A fee of $10.00 must be paid to amend a license certificate.
Only one (1) place of business may be operated under the same license. A licensee may operate more than one (1) place of business by filing an application on the prescribed form for each additional place of business and complying with the bond and license fee provisions of the Act.
License Rejection, Suspension and Revocation
DIFS will mail a notice of rejection to the credit union applicant who may, within 30 days of the date of such notice, appeal from such action to the circuit court.
Whenever DIFS rejects a license application, the license fee is retained (in order to defray costs of investigation).
DIFS may suspend or revoke any license, upon 30 days notice to a licensee, in the following circumstances:
- Material misstatements in the license application;
- Violations of any MVSFA provisions;
- Refusal to permit the DIFS commissioner, or his/her designated representative, to make examinations authorized by the Act;
- Failure to maintain the required bond;
- Failure to maintain satisfactory records required by the Act;
- Falsification of any records required by the Act;
- Failure to report any required report to DIFS within the time stipulated in the Act;
- Failure to pay any required fine for failure to file reports to DIFS within the time stipulated;
- The commission of fraud against any retail buyer to the buyer's damage, or willful failure to perform any written agreement with any retail buyer; or
- Any fact or condition exists or is discovered which, if it had existed or had been discovered at the time of filing of the application for such license, would have warranted DIFS to refuse to issue such license.
Revocation may be limited to a particular license, or with regard to one or all places of business operated by a credit union licensee.
Whenever a license has been revoked, DIFS will not issue another license to the credit union until the expiration of at least one (1) year from the effective date of revocation of said license.
Investigation and Examination of Records
The DIFS commissioner is authorized and empowered to investigate and examine any and all books, accounts, papers, records, documents and files of any licensee (or person presumed to be “engaged in business contemplated by the MVSFA”), at any time during regular business hours, to the extent that such investigation and examination pertain to matters regulated under the provisions of the MVSFA.
A person who is not licensed under this act is presumed to be “engaged in business contemplated by the MVSFA” if (s)he, as principal, agent or broker advertises or solicits business for which a license is required by the MVSFA.
The commissioner is also empowered to require the attendance and testimony of witnesses and the production of any books, accounts, papers, records, documents and files relating to such business which he/she has authority to investigate.
Books, Accounts and Records; Maintenance
Every licensee must maintain, at the place of business designated in the license certificate, such books, accounts and records of the business conducted under the license issued for such place of business as will enable the commissioner to determine whether the credit union is following the MVSFA.
Credit union licensees operating one (1) or more licensed places of business in this state may maintain the general control records of all such offices at any one (1) of such offices upon the filing of a written request with DIFS designating the office at which such control records are maintained and upon approval of such request by DIFS.
All books, accounts and records of licensee must be maintained in the English language.
All books, accounts and records of licensees, including any cards used in a card system, must be preserved and available for examination by DIFS for at least 2 years after making the final entry therein.
Installment Sale Contract
An installment sale contract must:
- Be in writing;
- Contain all of the agreements between the buyer and the seller relating to the installment sale of the motor vehicle sold, and shall be signed by both the buyer and the seller;
- Be completed as to all essential provisions prior to the signing of the contract by the buyer and contain such other information as the administrator may require;
- Must contain the following notice printed prominently and in the form indicated in 12-point type or larger directly above the space provided in the contract form for the signature of the buyer: “Notice to buyer. Do not sign this contract in blank. You are entitled to 1 true copy of the contract you sign without charge. Keep it to protect your legal rights”; and
- Provide for weekly, semi-monthly, or monthly payments of the time balance in substantially equal periods and amounts. [This provision does not apply to installment sale contracts made between an installment seller and an installment buyer who is an employee of the installment seller.]
An exact copy of the installment sale contract must be furnished by the seller to the buyer without charge at the time the buyer signs the contract. The buyer's copy of the contract must contain the signature of the seller identical with the signature on the original contract.
The seller must obtain from the buyer a written acknowledgment of the delivery of the copy of the contract.
The acknowledgment must be printed in 12-point type or larger and, if attached to the contract, it must be printed below the buyer's signature to the contract and independently signed.
Installment Sale Contract Contents
An installment sale contract must include the full names and addresses of all the parties to the contract, the date when signed by the buyer, and a description of the motor vehicle sold that is sufficient for accurate identification.
An installment sale contract must set forth all of the following separate items in the following order:
- The cash price of the motor vehicle. This amount must include any taxes, the cash price of agreed upon accessories and installation of the accessories, the cash price of any extended warranty or service contract, and a documentary preparation fee.
The documentary preparation fee may not exceed 5% of the cash price of the motor vehicle or $160.00, whichever is less. Beginning on January 1, 2005, DIFS will adjust the maximum amount then in effect for this fee every 2 years to reflect the cumulative percentage change in the consumer price index for the 2 immediately preceding calendar years, as determined by DIFS. As used in this subdivision, "consumer price index" means the United States consumer price index for all urban consumers, U.S. city average, as defined and reported by the United States department of labor, bureau of labor statistics.
- The down payment made by the buyer at the time of or before execution of the contract, indicating whether made in cash, represented by the agreed value of a trade-in motor vehicle or other goods, or both. The amount of cash and the value of any trade-in shall be stated separately. A description that is sufficient for identification of any trade-in must be included.
- The unpaid cash price balance, which is the difference between the cash price and the down payment.
- The cost of any insurance premium or travel emergency benefits pertaining to the operation of the automobile that the seller agrees to extend credit to the buyer to obtain.
The installment sale contract must set forth the term of the insurance and a concise description of the terms of the insurance policy and the travel emergency benefits. If the precise cost of the insurance is not available at the time the contract is signed, an estimated amount, obtained from the current published applicable manual of a recognized standard insurance rating bureau, may be set forth in the contract.
Within 25 days after making the installment sale contract, the seller must mail or cause to be mailed to the buyer at his/her address as shown on the contract a certificate or policy of insurance and a statement showing the exact cost of the insurance. Each installment sale contract must contain the following warning, printed prominently in red ink and in 12-point type or larger, directly preceding the notice provided for in section 12(d), enclosed by a continuous heavy line:
Warning: The insurance afforded hereunder does not cover
liability for injury to persons or damage to property of
others unless so indicated hereon.
- The cost of any guaranteed asset protection (GAP) waiver that the seller agrees to extend credit to the buyer to obtain. For purposes of this subdivision, all of the following apply:
a. "Guaranteed asset protection waiver" means that term as defined in section 3 of the Guaranteed Asset Protection Waiver Act.
b. A GAP waiver may be included as part of, or as an addendum to, an installment sale contract.
c. An installment seller that offers, sells, or provides GAP waivers to installment buyers in this state must comply with the Guaranteed Asset Protection Waiver Act.
d. Any cost to an installment buyer for a GAP waiver entered into in compliance with the Truth in Lending Act (15 USC 1601 to 1667f), and the regulations promulgated under that act, 12 CFR part 226, must be separately stated and is not considered a finance charge or interest.
- Other necessary or incidental costs that the seller contracts to pay on behalf of the buyer and for the amount of which the seller agrees to extend credit to the buyer as authorized under this act. The contract must contain an itemization of the nature and amount of the costs.
- The principal amount financed.
- The finance charge.
- The time balance, which represents the total obligation of the buyer that he/she agrees to pay in 2 or more scheduled payments.
- The payment schedule, which must include the number of payments, the amount of the payments, and the time of the payments required to liquidate the time balance.
An installment sale contract must also:
- State clearly any collateral security given to secure the buyer's obligation under the contract;
- Contain a summary notice of the buyer's principal legal rights respecting prepayment of the contract and rebate of the finance charge and reinstatement of the contract in the event of repossession; and
- Contain specific provisions concerning the buyer's liability for default charges, repossession, and sale of the motor vehicle in case of default or other breach of contract, and the seller's or holder's rights concerning any collateral security.
Certain Payments by Seller on Behalf of Buyer (i.e., “Negative Equity”)
A seller in an installment sale transaction may pay on behalf of the buyer and agree to finance in the installment sale contract all or part of the balance of any indebtedness secured by a motor vehicle that the seller takes in trade in the installment sale transaction or all or any part of the balance owed under a lease of a motor vehicle that is terminated in connection with the installment sale transaction.
If this applies in an installment sale transaction, the other necessary or incidental costs included in the installment sale contract must include the amount the seller agreed to finance.
Prohibited Provisions in an Installment Sale Contract
An installment sale contract may not be signed by a party to the contract unless it contains all of the information and statements required by the MVSFA.
An installment sale contract may not contain any of the following information:
- An acceleration clause under which any part or all of the time balance represented by payments, not yet matured, may be declared immediately payable because the seller or holder deems itself to be insecure;
- Any provision authorizing a person acting on behalf of the seller or holder to enter upon premises of the buyer unlawfully or to commit a breach of the peace in the repossession of the motor vehicle or collateral security (a right of repossession of a motor vehicle provided in an installment sale contract must be exercised only in the manner provided in Part 6 of Article 9 of the Uniform Commercial Code, 1962 PA 174, MCL 440.9601 to 440.9628, concerning taking possession of and disposing of collateral);
- Any provision by which the buyer waives a right of action against the seller, holder, or other person acting on behalf of the holder, for an illegal act committed in the collection of the payments under the contract or in the repossession of the motor vehicle or collateral security;
- Any provision by which the buyer executes a power of attorney appointing the seller, the holder, or the agent of the licensee as the buyer's agent in collection of the payments under the contract or in repossession of the motor vehicle sold or collateral security; or
- Any provision relieving the holder, or other assignee, from liability for legal remedies which the buyer has against the seller under the contract or under a separate instrument executed in connection with the contract.
Evidence of Obligation
A person may not take a negotiable instrument, other than a currently dated check or draft, as evidence of the obligation of the buyer in a retail sale of a motor vehicle.
A holder of an installment sale contract is subject to all the claims and defenses of the buyer arising out of the installment transaction, but the buyer's recovery may not exceed the amount paid to the holder thereunder.
An installment sale contract entered into under the Act must contain the following provision in at least 10-point boldface type:
Any holder of this consumer credit contract is subject to all
claims and defenses which the debtor could assert against the
seller of goods or services obtained pursuant hereto or with
the proceeds hereof. Recovery hereunder by the debtor shall
not exceed amounts paid by the debtor hereunder.
Sale, Transfer or Assignment of an Installment Sale Contract
Whenever an installment sale contract is lawfully sold, transferred or assigned to a person who is licensed as a sales finance company under the MVSFA, the new holder must furnish to the buyer a written notice of such sale, transfer or assignment, excepting when assignment is made only to secure a bona fide commercial loan or pursuant to a bulk sale of installment sale contracts.
Such notices must include the name and address of the new holder and notify the buyer of the name and address of the person authorized to receive future payments on such contract. If such notice has not been given, any payment or tender of payment made to and any service of notice on the last known holder by the buyer shall be binding upon any subsequent holder. An installment sales contract may not be sold to any person doing business in this state who is not licensed under the Act.
Installment Sales Contract: Insurance of Vehicle
The buyer of a motor vehicle under an installment sale contract may be required to provide insurance on such motor vehicle at the buyer's expense for the protection of the seller or subsequent holder. Such insurance must be limited to insurance against substantial risk of damage, destruction or theft of such motor vehicle.
However, the buyer and seller may contract for travel emergency benefits pertaining to the operation of the automobile, or other or additional insurance as security for or by reason of the obligation of the buyer. Such insurance must be written for the dual protection of the buyer and of the seller, or subsequent holder, to the extent of his/her interest in the motor vehicle. In the event this cannot be done, or it is cancelled by the insurance company prior to expiration, the seller, or subsequent holder, may obtain insurance to protect its interest in the motor vehicle and the buyer may be required to pay the cost thereof.
The buyer must have the privilege of purchasing such insurance from any insurance company, agent or broker authorized to do business in Michigan other than the installment seller. An installment seller may not coerce, threaten, or in any manner influence any installment buyer to purchase insurance from any insurance company, agent or broker designated by such seller. However, the inclusion of the cost of the insurance premium in the installment sale contract, when the buyer selects the company, agent or broker, remains optional with the seller.
Whenever the seller contracts to purchase, at the buyer's expense, such insurance on a motor vehicle sold under an installment sale contract, such insurance must be purchased through an agent and/or broker or other person, authorized to conduct business in Michigan, and such insurance must be written by an insurance company qualified to do business in Michigan.
Unexpired Insurance Premiums
If unexpired insurance premiums received by the seller or holder resulting from the cancellation of insurance which was originally placed by the buyer's expense cannot be used in procuring comparable insurance, such unexpired insurance premiums must be credited to the last maturing installments under the contract.
Installment Sale Contract: Costs and Fees
In addition to the cost of insurance premiums and travel emergency benefits, the seller of a motor vehicle under an installment sale contract may require the buyer to pay certain other costs incurred in the sale of a motor vehicle under such contract as follows:
- Fees, payable to the state of Michigan, for filing a lien or encumbrances on the certificate of title to a motor vehicle sold under an installment sale contract or collateral security thereto.
- Fees, payable to a public official, for filing or recording and satisfying or releasing the installment sale contract or instruments securing the buyer's obligation.
- Fees for notarization required in connection with the filing and recording or satisfying and releasing a mortgage, judgment lien or encumbrance.
The seller of a motor vehicle under an installment sale contract may also contract with the buyer to pay, on behalf of the buyer, such other costs incidental to the sale of a motor vehicle and contracted for voluntarily by the buyer as follows:
- Fees in amounts established by and paid to the state of Michigan for titling and registration of the motor vehicle and issuance or transfer of registration plates.
- If the buyer of a motor vehicle elects to title or register the motor vehicle electronically, fees payable to any third party authorized by the secretary of state and to the seller for electronic titling and registration of the motor vehicle.
Finance Charge on Installment Sale Contract
A seller licensed under this act may charge the buyer a finance charge on any installment sale contract covering the retail sale of a motor vehicle in this state. The finance charge may not exceed the rate permitted by the Credit Reform Act (1995 PA 162, MCL 445.1851 to 445.1864). Under the Credit Reform Act, the rate of interest or finance charge for an extension of credit may not exceed 25% per annum.
The seller must compute the finance charge on the principal amount financed at the annual rates on installment sale contracts that are payable by installment payments, extending for a period of one (1) year.
On installment sale contracts providing for installment payments extending for a period that is less than or greater than one (1) year, the seller must compute the finance charge proportionately.
If an installment sale contract provides for payment other than in equal successive weekly, semimonthly, or monthly installments, the finance charge may be at a rate that will provide the same annual percentage rate (APR) as is permitted on monthly payment contracts considering the schedule of payments in the contract. The seller must disclose the APR in accordance with disclosure requirements of the Truth in Lending Act and Regulation Z.
The seller may compute the finance charge on the basis of a full month for a fractional month period in excess of 10 days.
A seller may charge a minimum finance charge of $15.00 on an installment sale contract in which the finance charge, when computed at the rates indicated, results in a total charge of less than $15.00.
Installment Sale Contract Extensions
The holder of an installment sale contract may extend the scheduled due date, defer a payment or payments, or renew the unpaid time balance of the contract. The holder may contract for, receive, and collect a refinance charge for the extension, deferment, or renewal. The refinance charge may not exceed the amount permitted by the Credit Reform Act.
The refinance charges may be computed on the basis of a full month for any fractional month period in excess of 10 days.
The holder of an installment sale contract may not include in any contract for refinancing the contract any cash loan to the buyer, nor any credit extended to the buyer incidental to the purchase of goods or services. A loan under this section does not include, nor does this act prohibit, a rearrangement of payments under the installment sale contract by a refinance transaction involving a restoration of certain installment payments made under the contract, but the refinance charge on the amount restored may not be more than permitted by the Credit Reform Act. The holder of the contract may embody in the refinance contract the cost of accessories, equipment, and parts for the motor vehicle sold under the contract, and the cost of repairs and services to the motor vehicle including finance charges on the contract.
Installment Sale Contract: Default Charge
A default charge may be collected on each installment payment of an installment sale contract that is not paid on or before the due date of the payment. The default charge may not exceed the rate permitted by the Credit Reform Act on the amount of each payment in arrears. Under the Credit Reform Act, a late fee may not exceed $15.00 or 5% of the installment payment, whichever is greater.
The default charge may be computed on the basis of a full calendar month for any fractional month period in excess of 10 days. Each default charges may be collected, when earned, during the term of the contract, or may be accumulated and collected at final maturity or at the time of final payment under the contract. The default charge may not be collected on any payment in default because of an acceleration provision in the contract.
Installment Sale Contract: Prepayment of Unpaid Time Balance
The buyer may prepay at any time all or a part of the unpaid time balance under an installment sale contract. When this occurs prior to maturity, refinancing, or termination by surrender or repossession and resale of the motor vehicle, the holder of the installment sale contract must immediately rebate the unearned portion of the finance charge to the buyer. Rebate may be made in cash or credited to the amount due on the obligation of the buyer.
The unearned portion of the finance charge must be rebated by the actuarial method. The holder is not required to rebate a portion of the unearned finance charge that results in a net minimum finance charge on the contract less than $15.00. The holder is not required to rebate an unearned finance charge when the amount due, computed as set forth in this section, is less than $1.00.
Installment Sale Contract; Payments
An installment sale contract may provide for a series of weekly, semi-monthly or monthly payments in substantially equal periods and amounts, followed by a single larger payment of the unpaid time balance. In the event of such a single large payment, the buyer must have the right to an option, at the time such larger payment becomes due, to make the payment or enter into a second contract. This second contract must conform to all the provisions of the MVSFA, except that the refinance charge may not exceed the finance charge rate provided for in the first contract.
Installment Sale Contract: Buyer Furnished Statement of Account
At any time after execution of an installment sale contract and within one (1) year after termination of such contract, the holder of such contract must furnish the buyer, upon request, with a complete and detailed statement of account showing:
- All amounts paid by the buyer on account of the obligation, dates of payment and the allocation of such payments to reduction of the time balance, refinance charges, default charges, court costs, attorney's fees, expenses of retaking, repairing, storing, or otherwise;
- All amounts credited to the buyer as rebates for prepayment and unexpired premiums on insurance cancelled;
- The amount of the installment payments, accrued charges and expenses incurred, if any, which are due and payable; and
- The number and amount of installment payments to become due and payable, if any, and the due dates thereof.
One (1) such statement must be provided to the buyer without charge during the term of the contract or within one (1) year after termination. The holder may require payment of a fee of 50 cents for a duplicate copy, as well as for any additional statements.
Installment Sale Contract: Receipt
Whenever payment is made on account of any installment sale contract, the person receiving such payment must, at the time of receipt, furnish to the buyer or to the person making the payment on behalf of the buyer, a complete written receipt, if requested. A receipt must be given if payment is made in cash.
Such receipt must show the date of payment, the amount of the payment, and must identify the obligation to which such payment is applicable.
When payments are made by mail, the holder may require the buyer to supply a self-addressed stamped envelope as a condition for mailing such receipt, if (s)he has been previously notified of such condition.
Installment Sale Contract: Payment in Full Release & Discharge
Upon payment in full of the time balance and other amounts lawfully due under an installment sale contract, the holder must, unless the buyer is otherwise indebted to the holder and has secured such debt by lien upon the motor vehicle, do the following:
- Return to the buyer the original of all instruments evidencing indebtedness or constituting security under an installment sale contract, which were signed by the buyer or his sureties or guarantors in conjunction with such contract, excepting such instruments as are filed or recorded with a public official and retained in the files of such official;
- Release all security interest in the motor vehicle or in collateral security to the obligation of the buyer under such contract; and
- Deliver to the buyer all documents of title obtained from him.
When the final payment on an installment sale contract is made in cash, money order or equivalent tender, by the buyer or his/her authorized representative, at the office of the holder, a legal discharge of this encumbrance, must be delivered at the time of such tender of payment, if demanded by the buyer; otherwise delivery may be made at a later date in person or by mail as may be arranged between buyer and holder.
All other instruments referred to in this section must be delivered or mailed to the buyer within 25 days of the date of final payment.
Installment Sale Contract: Limitation on Charges
A credit union licensee may not charge, contract for, collect, or receive from the buyer, directly or indirectly, any further or other amount for costs, charges, examination, appraisal, service, brokerage, commission, expense, interest, discount, fees, fines, penalties, or other thing of value in connection with the retail sale of a motor vehicle under an installment sale contract in excess of the cost of insurance premiums, other costs, the finance charges, refinance charges, default charges, recording and satisfaction fees, court costs, attorney's fees, and expenses of retaking, repairing, and storing a repossessed motor vehicle which are authorized by the MVSFA.
A credit union licensee may not collect any charge in connection with a contemplated sale of a motor vehicle under an installment sale contract if the contract is not consummated (except for a deposit paid by a prospective buyer to a seller as a binder on the contemplated purchase).
Installment sellers may not receive from any insurance company, agent, or broker, any portion of an insurance premium involved in the retail installment sale of a motor vehicle other than for the benefit of the installment buyer. All payments must be held by the installment seller in trust for the benefit of the installment buyer and must be paid to the installment buyer within 30 days (unless used in procuring comparable insurance or credited to matured unpaid installments under the contract).
All of the costs and charges in connection with the contract, other than for insurance, must be void and unenforceable and any amounts paid by the buyer for such costs and charges, other than insurance, must be applied on the principal of the contract.
If a motor vehicle is covered by an installment sale contract, the buyer may not transfer equity in that vehicle to another person without the written consent of the holder of the sale contract. The holder of the sale contract may charge a transfer fee of $25.00.
Installment Sale Contract: Expiration, Surrender or Revocation of License
The expiration, surrender or revocation of an MVSFA license will not impair or affect the obligation of any motor vehicle installment sale contract entered into lawfully or lawfully acquired by a holder: Provided, however, that the holder of such contracts must forfeit the right to charge, contract for, receive or collect refinance charges authorized by the MVSFA for renewal of a contract, if the license of such holder expired, was surrendered, or was revoked prior to the date of such renewal.
A credit union whose license has expired, was surrendered or was revoked may thereafter sell, transfer or assign contracts entered into or acquired prior thereto to any licensed sales finance company or banking institution.
A credit union whose license has expired, was surrendered or was revoked may not thereafter enter into new contracts for the retail sale of motor vehicles under installment sale contracts, and may not thereafter discount, purchase or otherwise acquire such contracts.
Installment Sale Contract: Sales Outside State
Nothing in the MVSFA will be construed to prevent the enforcement in the state of Michigan of an obligation arising from the sale of a motor vehicle made outside of the state of Michigan under an installment sale contract valid in such other state, entered into or executed by the buyer outside of the state of Michigan, whether or not such buyer was a resident of this state or the seller a licensee at the time they entered into such contract.
Businesses Not Affected or Impaired by Act
The MVSFA will not affect or impair a business conducted lawfully under the Michigan Credit Union Act.
Violation of Act; Penalty
A credit union that willfully or intentionally engages in this state in business as a sales finance company (as so defined in the MVSFA) without having obtained the required license will be guilty of a misdemeanor, and upon conviction thereof will be sentenced to pay a fine of not more than $5,000.00, or to suffer imprisonment of not more than 3 years, or both, at the discretion of the court.
Willfully or intentional violations any provision of the MVSFA, or the direction or consent to such violation, will be guilty of a misdemeanor, and upon conviction thereof will be sentenced to pay a fine of not more than $500.00 for the first offense; and for each subsequent offense a like fine and/or suffer imprisonment not to exceed one (1) year in the discretion of the court.